Richard Branson will be jetting or quite possibly ballooning (for old time’s sake) into Dublin next Thursday for the 10am launch party in the RDS for Virgin Media, the new name for UPC Ireland. Please, no comedians. It’s too early in the morning for the spectre of a grim-faced comedian forced to take a corporate booking because it pays more than a real gig.
There has been a degree of inevitability about the rebranding of UPC Ireland to Virgin Media ever since UPC owner Liberty Global bought Virgin Media two years ago for a cool $24 billion. “Formal co-operation” between UPC Ireland and Virgin commenced last December. (They merged.)
Few of its customers here will care that the UPC name began life in the Netherlands as United and Philips Communications, later United Pan-European Communications. As a household brand in Ireland, it hasn’t quite reached adolescence, with the company ditching its NTL and Chorus names only five years ago.
Still, UPC lived a long life compared with Zavvi, the retail chain that bought the remaining Irish units of Virgin Megastores in 2007 and was liquidated two years later for its trouble. Brands come and go in the media and communications industry, and so too do business models.
The Virgin Media brand inherits from UPC Ireland some 505,200 “customer relationships” and some 1,099,000 “revenue-generating units”. (Since UPC is in the triple-play market, selling broadband, home phone and television subscriptions, one customer can translate as two or three revenue-generating units.) These units break down into 379,300 television subscribers, 367,300 broadband subscribers and 352,500 home phone customers.
While UPC’s broadband customer base has surged thanks to its network investment, in television it has been in retreat for some time. Television customers fell 8.6 per cent in the year to the end of the second quarter and are almost a third lower than they were at the midpoint of 2008.
This has put pressure on both its total number of customers and its revenue, and adding a far from spectacular 1,500 broadband subscriptions in the second quarter won’t have helped.
Competition is fierce. Virgin Media’s big rival in television is Sky Ireland, but in broadband it is the now com-less Eir, and at its own rebranding part last week Eir acknowledged the importance of broadband, the pipe from which everything else flows, to its future success. “To me, broadband is a central product,” said Jon Florsheim, managing director of Eir’s consumer division. “If you go anywhere where the broadband is not working it sends everyone into the throes of panic.”
As it stands, Eir has a 35.3 per cent share of the fixed broadband market, followed by UPC/Virgin on 29 per cent, while Sky has an 8.8 per cent market share. The joker in the pack is Vodafone. It has a 17.6 per cent share of the fixed broadband market, and is also one half of Siro, a joint venture with ESB that will soon be unleashing superfast broadband.
Vodafone also happens to be the kind of multinational that is cash-rich. Talk of a potential merger or asset swap between the telco and John Malone’s Liberty Global have been circulating for what seems like forever. Negotiations are said to have stalled, which is good news for everybody else – a Liberty-Vodafone beast would elicit only hollow laughter from its rivals, swiftly followed by grave lobbying of the competition regulator.
Discounting any Vodafone tie-up and allowing for UPC Ireland’s mixed performance of late, Virgin Media can still be expected to embark upon its Irish push with confidence and some brio - only a small proportion of it borrowed from showman Branson, whose Virgin Group licenses the use of the Virgin name to Liberty Global.
Liberty is fresh from acquiring TV3 Group – though the deal has yet to be cleared – while its stake in ITV plc, bumped up to 9.9 per cent over the summer, is one to watch. Next week’s launch party should also see it unveil more details of its planned mobile offer, which follows a mobile virtual network operator (MVNO) agreement with Three. Like Eir, Virgin will be a quad-play affair, but unlike Eir it will also have its fingers in the content business.
Florsheim claimed Eir was “not fazed” by Virgin Media. “It’s a great brand in the UK,” he said pointedly, muttering that he hoped they used the Union Jack in their marketing. Such schoolboy errors by British brands have been known to surface here.
But though Virgin Media is a completely different corporate entity from the (now mostly defunct) Virgin Megastores chain, Ireland cannot be said to be, ahem, virgin territory for the Virgin brand. There is no reason why, under the control of Irish- American Malone, Virgin Media cannot thrive here.
